I Started Talking to My Friends About Money — and We Had Financial Breakthroughs

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Many people feel uncomfortable talking about money. Find out how breaking that taboo can help the people you care about build financial security. 

Money may make the world go around, but it often stops conversation dead in its tracks. Finances are up there with politics, sex, and religion in terms of taboo topics. And yet, talking about our cash situations can be transformative. Here’s what happened when I started to talk to my friends about money.

1. Two friends started to actively manage their cash flow

Budgeting is a fundamental part of building financial security. It helps us to live within our means and know what we can and cannot afford to do. Yet, for many, a mere mention of the word “budget” is enough to send them into a tailspin.

One friend said she’d grown up being told that she wasn’t good at math and now has a serious financial blind spot. Our conversations helped her to understand the basics of budgeting. She installed a budgeting app and planned how much she’d have left each month after covering the essentials. The big news? When we started to make a budget together, she found there were a few months where she hadn’t received her full paycheck. She’s now reclaimed thousands of dollars that got lost in an accounting error.

Another friend said, “I don’t want to make a budget because I don’t want to have to stop spending.” She worked with a financial advisor and allocated a set amount of money to the fun stuff, alongside some savings and investments for the future. It’s true that budgets can be about cutting spending on non-essentials. But it doesn’t have to be that way. They can also help you prioritize your spending. By cutting spending in some areas, you may wind up with more money in your bank account for the things you love.

2. Several friends started to invest for the future

The combination of compound interest and time is a powerful thing. Unfortunately, when you’re in your 30s, old age seems a long way off and it often feels like there are other more urgent demands on your wallet. Speaking personally, I was late to understanding the difference that 10 or 20 years makes in terms of building wealth.

Let’s say you invest $10,000 in the stock market and are able to get returns of around 9% (which is a bit less than the average returns from the S&P 500 over the past 30 years). There are no guarantees when it comes to investing. But if you were able to get a 9% annual return on that $10,000, in 10 years time, your assets could be worth around $24,000. Give it another 20 years, and those assets could be worth $130,000. That doesn’t factor in inflation, but it’s still a lot of money.

Following our discussions about retirement planning, several friends have opened brokerage accounts and started to invest a small amount each month. We looked at a compound interest calculator online and talked about what it means to be financially free and how much we might need to get there. It’s never too late to start building a portfolio that will accumulate in value over time.

3. Emergency funds became a reality, not an item on a list

Several friends said they knew they should have an emergency fund, but it was something they kept kicking down the road. Open conversations about money made them prioritize those contributions. And we supported each other by doing less expensive activities, such as going for walks or cooking dinner at home rather than eating out.

Having three to six months’ worth of cash in a savings account can tide you over if you lose your job or face a medical crisis. It can stop you having to take on debt or sell off your investments. Even so, it isn’t something people talk about very often. Celebrating one another’s progress toward this important financial goal made it more achievable.

Bottom line

It isn’t easy to manage your money. There’s all kinds of conflicting advice on the internet, and almost unlimited ways to spend it. Plus, many of us didn’t learn about personal finance in school. That makes it all the more important to learn from your peers and bring money talk into the open.

Not only can we learn from one another, we can also encourage loved ones (and ourselves) as we progress toward our financial goals. A couple of my friends are so excited that they’re talking about creating a money club so we can learn together and share experiences. Break the taboo and see what kind of breakthroughs your friends can make.

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